<PAGE> 1
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE B.F.GOODRICH COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
[BF GOODRICH LOGO]
NOTICE OF
2000
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
<PAGE> 3
THE BFGOODRICH COMPANY BF GOODRICH LOGO
Three Coliseum Centre
2550 West Tyvola Road
Charlotte, North Carolina 28217
NOTICE TO SHAREHOLDERS
THE ANNUAL MEETING OF SHAREHOLDERS of The B.F.Goodrich Company, a New York
corporation, will be held at the Charlotte Marriott City Center, 100 West Trade
Street, Charlotte, North Carolina on April 17, 2000, at 10:30 A.M. to:
1. Elect eleven Directors to hold office until the next Annual Meeting of
Shareholders and until their respective successors are elected and
qualified.
2. Consider and act upon a proposal to ratify the appointment of Ernst & Young
LLP as Independent Auditors for the Company for the year 2000.
3. Approve the Company's Senior Executive Management Incentive Plan.
4. Transact such other business as may properly come before the meeting.
Information with respect to the above matters is contained in the Proxy
Statement attached to this Notice.
The Board of Directors has fixed February 28, 2000 as the record date for
determining shareholders entitled to notice of and to vote at the meeting. Only
holders of record at the close of business on that date shall be entitled to
notice of and to vote at the meeting or any adjournment thereof.
A proxy for use at the meeting in the form accompanying this Notice is hereby
solicited on behalf of the Board of Directors of the Company from holders of
Common Stock. Shareholders may withdraw their proxies at the meeting should they
be present and desire to vote their shares in person, and they may revoke their
proxies for any reason at any time prior to the voting thereof.
IT IS IMPORTANT THAT EVERY SHAREHOLDER BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES OWNED. TO MINIMIZE EXPENSE ASSOCIATED WITH
COLLECTING PROXIES, PLEASE EXECUTE AND RETURN YOUR PROXY PROMPTLY.
Dated March 3, 2000 By Order of the Board of Directors
Kenneth L. Wagner
Assistant Secretary
<PAGE> 4
THE BFGOODRICH COMPANY
PROXY STATEMENT
THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
B.F.GOODRICH COMPANY. Our Annual Meeting of Shareholders will be held at the
Charlotte Marriott City Center, 100 West Trade Street, Charlotte, North Carolina
at 10:30 A.M. on April 17, 2000.
All shareholders of record of Common Stock at the close of business on
February 28, 2000 are entitled to notice of and to vote at the meeting. There
were 110,237,864 shares outstanding and entitled to vote on such date, and each
share is entitled to one vote. There are no cumulative voting rights. All of the
shares represented by proxies submitted by such shareholders, and not revoked by
them, will be voted on all matters presented for a vote.
Most shareholders have a choice of voting over the Internet, by using a
toll-free telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Please refer to your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telephone and Internet access charges for
which you will be responsible. The Internet and telephone voting facilities for
shareholders of record will close at 5:00 p.m. E.S.T. on April 16, 2000.
Proxies for shares of Common Stock will also represent shares held under our
Dividend Reinvestment Plan. Proxies will also be considered to be voting
instructions to the Plan Trustee with respect to shares held in accounts under
The B.F.Goodrich Company Retirement Plus Savings Plan and similar plans of
subsidiaries. If participants in any such plan also are shareholders of record
with the same account information, they will receive a single proxy which will
represent all shares. If the account information is different, then the
participants will receive separate proxies. Participants in other Company
employee benefit plans will receive separate proxies.
You can revoke your proxy at any time before it is exercised by written notice
to the Company's Secretary, timely delivery of a properly executed, later-dated
proxy (including an Internet or telephone vote) or voting by ballot at the
meeting. If your shares are held in the name of a bank, broker or other holder
of record, you must obtain a proxy, executed in your favor, from the holder of
record to be able to vote at the meeting.
We will pay the expense of soliciting these proxies. In addition to using the
mails, our Officers, Directors and employees may solicit proxies personally, or
by telephone or by facsimile. We will reimburse brokers and others holding
shares in their names, or in the names of nominees, for their expenses in
sending proxy material to the beneficial owners of such shares and obtaining
their proxies. We have retained D. F. King & Co., Inc., 77 Water Street, New
York, New York 10005-4495, to assist us in soliciting proxies from shareholders,
including brokers, custodians, nominees, and fiduciaries, and will pay that firm
fees estimated at $9,500 for its services, plus the firm's expenses and
disbursements.
Our 1999 Annual Report, including financial statements, is being mailed with
this proxy statement to each shareholder of record. An additional copy will be
furnished to any shareholder upon request. If you received more than one copy of
our 1999 Annual Report and wish to reduce the number of reports you receive and
save us the cost of producing and mailing these reports, we will discontinue the
mailing of annual reports on the accounts you select if you mark the designated
box on the appropriate proxy card(s),
2
<PAGE> 5
or follow the instructions provided when you vote over the Internet or by
telephone. At least one account at your address must continue to receive annual
reports, unless you elect to view future annual reports and proxy statements
over the Internet. Mailing of dividends, dividend reinvestment statements, proxy
materials and special notices will not be affected by your election to
discontinue duplicate mailings of the annual report. If you own Common Stock
through a bank, broker or other holder of record and receive more than one 1999
Annual Report, contact the holder of record to eliminate duplicate mailings.
This proxy statement and our 1999 Annual Report are available on our Internet
site at www.bfgoodrich.com. Most shareholders can elect to view future proxy
statements and annual reports over the Internet instead of receiving paper
copies in the mail. If you are a shareholder of record, you can choose this
option and save us the cost of producing and mailing these documents by checking
the appropriate box on your proxy card or by following the instructions provided
if you vote over the Internet or by telephone. If you are a shareholder of
record and choose to view future proxy statements and annual reports over the
Internet, you will receive a proxy card in the mail next year with instructions
containing the Internet address to access those documents. If your shares are
held through a bank, broker or other holder of record, check the information
provided by that entity for instructions on how to elect to view future proxy
statements and annual reports over the Internet.
The approximate date on which we will begin mailing this proxy statement and
the accompanying proxy to shareholders is March 3, 2000. Our principal executive
offices are located at Three Coliseum Centre, 2550 West Tyvola Road, Charlotte,
North Carolina 28217.
VOTE REQUIRED FOR APPROVAL
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote at the meeting is necessary to constitute a quorum.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of constituting a quorum. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular
item and has not received voting instructions from the beneficial owner.
The eleven nominees for Director receiving a plurality of the votes cast at
the meeting in person or by proxy shall be elected. All other matters to be
voted upon at the meeting, including the ratification of the appointment of
independent auditors and approval of the Senior Executive Management Incentive
Plan will be decided by a majority of the votes cast "for" or "against"
approval. Consequently, abstentions and broker non-votes will have no effect on
the election of directors, ratification of the appointment of independent
auditors, approval of the Senior Executive Management Incentive Plan or any
other matter submitted to a vote at this meeting.
3
<PAGE> 6
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of eleven Directors to hold
office until the next Annual Meeting of Shareholders in 2001 and until their
respective successors are elected and qualified. It is intended that the
accompanying proxy will be voted for the election of the eleven nominees named
on the following pages, all of whom are now Directors and whose terms expire in
April 2000.
All nominees have indicated that they are willing to serve as Directors if
elected. If any nominee should be unable or unwilling to serve, the proxies will
be voted for the election of such person as may be designated by the Board of
Directors to replace such nominee.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE NOMINEES FOR
DIRECTOR.
4
<PAGE> 7
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
DAVID L. BURNER, age 60 -- Director since December 4, 1995.
DAVID L. BURNER PHOTO CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT, THE
BFGOODRICH COMPANY. Mr. Burner received his BSC degree from
Ohio University. He joined The BFGoodrich Company in 1983 as
the Financial Vice President of the Engineered Products
Group. Later that year he became Vice President and General
Manager of the Off-Highway Braking Systems Division and in
1985 became an Executive Vice President of the Aerospace and
Defense Division. In February 1987 Mr. Burner became
President of that Division, which is now BFGoodrich
Aerospace. He was elected a Senior Vice President of the
Company in April 1990 and Executive Vice President in
October 1993. He joined the Office of the Chairman in July
1994, was elected President of the Company in December 1995,
Chief Executive Officer in December 1996 and Chairman in
1997. Mr. Burner began his career with Arthur Andersen & Co.
Mr. Burner is a member of the Board of Directors of Brush
Wellman Inc., Carolina Power & Light Company and Milacron
Inc. He is also a member of The Business Roundtable and a
Trustee of The Ohio University Foundation.
DIANE C. CREEL, age 51 -- Director since December 22, 1997.
DIANE C. CREEL PHOTO CHIEF EXECUTIVE OFFICER AND PRESIDENT, EARTH TECH, an
international consulting engineering firm headquartered in
Long Beach, California. Ms. Creel has a B.A. and M.A. from
the University of South Carolina. Ms. Creel has served as
Chief Executive Officer and President of Earth Tech since
January 1993. Prior thereto, she served as Chief Operating
Officer of Earth Tech since 1987 and Vice President since
1984. Before joining Earth Tech, Ms. Creel was director of
business development and communications for CH2M Hill from
1978-1984. Prior to that, Ms. Creel was manager of
communications for Caudill Rowlett Scot, Houston, Texas from
1976 to 1978, and director of public relations for LBC&W,
Architects-Engineers-Planners, Columbia, South Carolina from
1971-1976. Ms. Creel currently serves on the Board of
Directors of Allegheny Technologies, Teledyne Technologies
and the Corporations and Trusts which comprise the Fixed
Income Fund of the American Funds Group of Capitol
Management Corporation.
GEORGE A. DAVIDSON, JR., age 61 -- Director since April 15,
GEORGE A. DAVIDSON, 1991. CHAIRMAN, DOMINION RESOURCES, INC., a natural gas and
JR. PHOTO electric power holding company. Mr. Davidson is a graduate
of the University of Pittsburgh with a degree in petroleum
engineering. Effective January 2000, Dominion Resources and
Consolidated Natural Gas Company merged. He has been
associated with Consolidated Natural Gas since 1966. He
became Vice Chairman of Consolidated Natural Gas in October
1985 and served in that position until January 1987, when he
assumed the additional responsibility of Chief Operating
Officer. In May 1987 Mr. Davidson became Chairman and Chief
Executive Officer. Mr. Davidson is a director of Dominion
Resources, Inc. and PNC Bank Corp. He serves on the National
Petroleum Council and the Allegheny Conference on Community
Development. Mr. Davidson is a director of the American Gas
Association, the Pittsburgh Foundation and Chairman of the
Board of The Pittsburgh Cultural Trust. Mr. Davidson is a
Trustee of the University of Pittsburgh, chairs the Board of
Visitors of the Katz Graduate School of Business and is the
Chairman Emeritus of the Pittsburgh Civic Light Opera Board.
</TABLE>
5
<PAGE> 8
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
JAMES J. GLASSER, age 65 -- Director since April 15, 1985.
JAMES J.GLASSER PHOTO CHAIRMAN EMERITUS, GATX CORPORATION, a transportation,
storage, leasing and financial services company. Mr. Glasser
holds a bachelor of arts degree from Yale University and a
doctor of jurisprudence degree from Harvard Law School. He
joined GATX Corporation in 1961 and served in various
executive capacities becoming President in 1974, Chairman of
the Board and Chief Executive Officer in 1978, and Chairman
Emeritus in April 1996. He is a Director of Harris Bankcorp,
Inc., Harris Trust and Savings Bank and Mutual Trust Life
Insurance Co. Mr. Glasser is also a Director of The Chicago
Music and Dance Theatre, Lake Forest Hospital, Chicago
Horticultural Society, Northwestern Memorial Corporation,
Voices for Illinois Children and a Trustee of the Chicago
Zoological Society and the University of Chicago and is
Chairman of the Executive Committee of the Chicago Community
Trust.
JODIE K. GLORE, age 53 -- Director since September 15, 1997.
JODIE K. GLORE PHOTO FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF IOMEGA
CORPORATION, a designer, manufacturer and marketer of smart
portable data storage solutions for personal computers and
other markets. Mr. Glore received his B.S. in engineering
from the United States Military Academy at West Point, N.Y.
and a M.S. in industrial and labor relations from the
University of Oregon. Mr. Glore was President and Chief
Executive Officer of Iomega Corporation from November 1998
to August 1999. Previously, Mr. Glore held a number of
executive positions with Rockwell International Inc. He
joined Allen-Bradley, now part of Rockwell Automation, in
1979 and held several management positions in new product
development and marketing. In 1985 he left Allen-Bradley and
joined Square D Company and held various management
positions, the most recent being Corporate Vice President of
Sales and Marketing. In 1992 Mr. Glore rejoined
Allen-Bradley as Senior Vice President for the Automation
Group. He was appointed President of Allen-Bradley in 1994
and in 1995 he assumed the additional title of Chief
Operating Officer for Rockwell Automation. In 1995 he was
also elected Senior Vice President of Rockwell International
and a member of its Corporate Strategy Committee. Mr. Glore
is a director of several non-profit organizations.
WILLIAM R. HOLLAND, age 61 -- Director since July 12, 1999.
WILLIAM R. HOLLAND CHAIRMAN AND CHIEF EXECUTIVE OFFICER, UNITED DOMINION
PHOTO INDUSTRIES, a diversified manufacturing company. Mr. Holland
has bachelor of art and juris doctorate degrees from the
University of Denver. He joined United Dominion in 1973 as
Vice President and General Counsel. He has held various
executive positions and has served as Chairman and Chief
Executive Officer since 1987. Mr. Holland is a Director of
J. A. Jones Construction Co. and Lance Inc. He is a member
of the Board of Commissioners of Carolinas HealthCare System
and a Trustee of the Manufacturers Alliance.
</TABLE>
6
<PAGE> 9
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
DOUGLAS E. OLESEN, age 61 -- Director since October 1, 1996.
DOUGLAS E. OLESEN PRESIDENT AND CHIEF EXECUTIVE OFFICER, BATTELLE MEMORIAL
PHOTO INSTITUTE, a worldwide technology organization, working for
government and industry. Dr. Olesen earned his B.S., M.S.
and Ph.D. degrees in Civil Engineering at the University of
Washington. In 1963 Dr. Olesen joined Boeing Aircraft
Company as a Research Engineer and assisted in developing
and testing closed life-support systems for long-term space
missions. He joined Battelle Memorial Institute, Northwest
Labs, in Richland, Washington in 1967 and served in a series
of management positions. Dr. Olesen was named Vice Presi-
dent and Director of the Northwest Division in 1979. In 1984
he became Executive Vice President and Chief Operating
Officer of the Battelle Memorial Institute in Columbus,
Ohio. Three years later he was elected President and Chief
Executive Officer. Currently he serves as a Director of
Columbia Energy Group, Inc. and its subsidiary, Columbia
Gas-Ohio, and The Ohio State University Foundation. He is
active in numerous community organizations.
RICHARD DE J. OSBORNE, age 65 -- Director since April 15,
RICHARD DE J. OSBORNE 1996. CHAIRMAN OF THE BOARD (RETIRED), ASARCO INCORPORATED,
PHOTO a leading producer of nonferrous metals. Mr. Osborne
received an A.B. in economics from Princeton University. He
joined ASARCO in 1975 as Vice President of Finance and Chief
Financial Officer. Mr. Osborne was elected a Director of
ASARCO in 1976, Executive Vice President in 1977, President
in 1982, and Chairman and Chief Executive Officer, in
addition to President, in 1995. He relinquished the title of
President in 1998 and retired as Chairman and Chief
Executive Officer in April 1999. Prior to joining ASARCO,
Mr. Osborne had been Executive Vice President of Finance and
Business Development at Fairchild Camera and Instrument
Corporation and held various executive positions in finance,
planning and management at IBM Corporation. Mr. Osborne is a
former Director of ASARCO and former non-executive Chairman
and a Director of Southern Peru Copper Corporation. He is a
Director of Schering-Plough Corporation, Birmingham Steel
Corporation, NACCO Industries, Inc. and The Tinker
Foundation. Mr. Osborne is also a Director of the Americas
Society and of the Council of the Americas. Mr. Osborne is a
former Chairman and Director of the National Mining
Association, the Copper Development Association, the
International Copper Association and the Silver Institute;
and was the President and a Director of the American
Australian Association. He is a member of the Council on
Foreign Relations and the Economic Club of New York.
</TABLE>
7
<PAGE> 10
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
ALFRED M. RANKIN, JR., age 58 -- Director since April 18,
ALFRED M. RANKIN, JR. 1988. CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NACCO
PHOTO INDUSTRIES, INC., an operating holding company with
interests in the mining and marketing of lignite,
manufacturing and marketing of forklift trucks, and the
manufacturing and marketing of small household electric
appliances. Mr. Rankin holds a Bachelor of Arts degree in
economics from Yale University, and a juris doctor degree
from the Yale Law School. He joined NACCO Industries in
February 1989 as President and Chief Operating Officer and
became President and Chief Executive Officer in May 1991. He
assumed the additional title of Chairman in May 1994.
Previously, Mr. Rankin served in a number of management
positions with Eaton Corporation, with the most recent being
Vice Chairman and Chief Operating Officer from April 1986 to
February 1989. He is a director of NACCO Industries, Inc.
and The Vanguard Group. He is a trustee of Cleveland
Tomorrow, the Cleveland Museum of Art, the Musical Arts
Association and University Hospitals of Cleveland.
JAMES R. WILSON, age 59 -- Director since December 22, 1997.
JAMES R. WILSON PHOTO CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CORDANT TECHNOLOGIES INC., formerly known as
Thiokol Corporation, a leading producer of solid propellant
rocket motors and high performance fasteners used in
commercial aircraft and industrial applications. Cordant
also owns 85 percent of Howmet International Inc., a
manufacturer of components for aircraft and industrial gas
turbine engines. Mr. Wilson holds a B.A. degree from the
College of Wooster and an M.B.A. degree from Harvard Univer-
sity. Mr. Wilson assumed the position of Chairman of Thiokol
Corporation in October 1995 and the position of President
and Chief Executive Officer in October 1993. Mr. Wilson
joined Thiokol in July 1989 as Vice President and Chief
Financial Officer and was named Executive Vice President in
October 1992. Prior to joining Thiokol in 1989, Mr. Wilson
served as Chief Financial Officer for Circuit City Stores
from 1987-1988, and as Executive Vice President and Chief
Financial Officer for Fairchild Industries, Inc. from
1982-1987. Earlier, he held various financial management
positions at Textron Inc. He is also a director of Cooper
Industries, Inc., First Security Corporation, a director and
Chairman of the Board of Howmet International Inc., and a
trustee of the College of Wooster, Wooster, Ohio.
</TABLE>
8
<PAGE> 11
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
A. THOMAS YOUNG, age 61 -- Director since April 17, 1995.
A. THOMAS YOUNG PHOTO RETIRED EXECUTIVE VICE PRESIDENT, LOCKHEED MARTIN
CORPORATION, an aerospace and defense company. Mr. Young is
a graduate of the University of Virginia with bachelor
degrees in aeronautical engineering and mechanical
engineering, and of the Massachusetts Institute of
Technology with a master's degree in management. Mr. Young
was with the National Aeronautics and Space Administration
from 1961 to 1982, serving in a number of management
positions including Mission Director of the Project Viking
Mars landing program and Director of the Goddard Space
Flight Center. In 1982 he joined Martin Marietta as Vice
President of Aerospace Research and Engineering, later
became Senior Vice President and President of Martin
Marietta Electronics & Missiles Group and Executive Vice
President. He became President and Chief Operating Officer
in January 1990, Executive Vice President of Lockheed Martin
Corporation in March 1995 and retired in July of that year.
Mr. Young is a director of Potomac Electric Power Company,
and Science Applications Informational Corp. Mr. Young is
also a Fellow of the American Astronautical Society, the
American Institute of Aeronautics and Astronautics and the
Royal Aeronautical Society and a member of the National
Academy of Engineering.
</TABLE>
9
<PAGE> 12
RETIRING DIRECTORS
John W. Guffey, Jr., David I. Margolis and Robert H. Rau will retire as of the
2000 Annual Meeting of Shareholders. Their wise counsel and able assistance will
be missed.
OTHER NOMINEES
Under our By-Laws, any shareholder entitled to vote at the Annual Meeting may
make nominations for director if such shareholder provides written notice to,
and such notice is received by, the Secretary of the Company generally not less
than 90 nor more than 120 days prior to the first anniversary of the preceding
year's annual meeting. For the 2000 Annual Meeting such notice must have been
received between December 20, 1999 and January 19, 2000. Each such notice must
include:
- the name, age, principal occupation or employment of each proposed nominee
and a brief description of any arrangement or understanding between the
nominee and others relating to why he or she was selected as a nominee, in
addition to any other information required by the SEC's proxy regulations;
- the proposed nominee's written consent to serve as a director if elected;
- the name and address of the shareholder proposing the nominee as well as any
other shareholders believed to be supporting such nominee; and
- the number of shares of each class of Company stock owned by such
shareholders.
No person is eligible for election as a director unless nominated in
accordance with the procedures contained in the By-Laws. See Appendix A for the
full text of the relevant section of the By-Laws. We have not received any
notice of additional nominees for director.
10
<PAGE> 13
HOLDINGS OF COMPANY EQUITY SECURITIES BY DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information with respect to the number of shares
of Common Stock beneficially owned by our Directors and Executive Officers as of
January 31, 2000.
<TABLE>
<CAPTION>
DIRECTORS'
DEFERRED
COMPENSATION LONG TERM
AMOUNT AND NATURE DIRECTORS' PLAN INCENTIVE PLAN
NAME OF OF BENEFICIAL PHANTOM PHANTOM PHANTOM PERCENT
BENEFICIAL OWNER OWNERSHIP(1) SHARES(3)(4) SHARES(3)(4) SHARES(4)(5) OF CLASS(2)
---------------- ----------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
David L. Burner 298,537 -- -- 46,750 *
Laurence A. Chapman 235,284 -- -- 13,484 *
Diane C. Creel 206 1,856 1,154 -- *
George A. Davidson, Jr. 5,000 7,034 1,154 -- *
James J. Glasser 2,000 -- 1,154 -- *
Jodie K. Glore 200 1,856 2,000 -- *
John W. Guffey, Jr. 1,012,454 -- -- -- *
William R. Holland 2,000 369 -- -- *
Marshall O. Larsen 308,908 -- -- 23,706 *
David I. Margolis 29,592 369 -- -- *
Douglas E. Olesen 200 2,599 1,154 -- *
Richard de J. Osborne 1,077 2,599 1,154 -- *
David B. Price, Jr. 264,409 -- -- 21,714 *
Alfred M. Rankin, Jr. 1,000 2,254 1,795 -- *
Robert H. Rau 131,789 -- -- -- *
James R. Wilson 4,692 1,856 2,206 -- *
A. Thomas Young 1,000 3,310 2,206 -- *
21 Directors and 2,577,778 24,102 13,977 123,989 2.41%
Executive Officers
as a Group
<CAPTION>
AMOUNT AS TO WHICH
THERE IS
------------------------
SOLE
NAME OF SOLE VOTING INVESTMENT
BENEFICIAL OWNER POWER POWER
---------------- ----------- ----------
<S> <C> <C>
David L. Burner 42,887 42,887
Laurence A. Chapman -0-(6) -0-(6)
Diane C. Creel 206 206
George A. Davidson, Jr. 5,000 5,000
James J. Glasser 2,000 2,000
Jodie K. Glore 200 200
John W. Guffey, Jr. 155,654 155,654
William R. Holland 2,000 2,000
Marshall O. Larsen 36,608 36,608
David I. Margolis 29,592 29,592
Douglas E. Olesen 200 200
Richard de J. Osborne -0-(7) -0-(7)
David B. Price, Jr. 76,749 76,749
Alfred M. Rankin, Jr. 1,000 1,000
Robert H. Rau 9,990(8) 9,990(8)
James R. Wilson 4,692 4,692
A. Thomas Young 1,000 1,000
21 Directors and 396,108(9) 396,108(9)
Executive Officers
as a Group
</TABLE>
- ---------------
* Less than 1%.
(1) Includes the approximate number of shares credited to the individuals'
accounts in the Company's Retirement Plus Savings Plan or similar plans of the
Company's subsidiaries, the Company's matching portion of which is subject to
vesting requirements. Includes shares not presently owned by the individuals but
which are subject to stock options exercisable within 60 days as follows: D. L.
Burner, 255,650 shares; J. W. Guffey, Jr., 856,800 shares; M. O. Larsen, 272,300
shares; D. B. Price, Jr., 187,300 shares; L. A. Chapman, 178,800 shares; R. H.
Rau, 79,164 shares; and all Directors and Executive Officers as a group,
2,065,103 shares. Excludes 213,350 shares not presently owned by Mr. Burner but
which are subject to stock options exercisable within 60 days, as to which he
does not have voting or investment power and disclaims beneficial ownership. All
ownership is direct, except Mr. Chapman owns 11,784, Mr. Guffey owns 1,881, Mr.
Rau owns 42,635 and all Directors and Executive Officers as a group own 61,300
shares indirectly. Mr. Guffey disclaims beneficial ownership of the 1,881 shares
owned indirectly.
(2) Does not include Directors' Phantom Shares or Directors' Deferred
Compensation Plan Phantom Shares.
(3) Number of Phantom Shares awarded under Directors' Phantom Share Plan and
Deferred Compensation Plan, see "Governance of the Company -- Compensation of
Directors".
(4) Phantom shares are not outstanding and there is no voting or investment
authority.
(5) Phantom shares credited under the Long-Term Incentive Plan are subject to
achievement of performance goals.
(6) Shared voting and investment power as to 56,484 shares.
(7) Shared voting and investment power as to 1,077 shares.
(8) Shared voting and investment power as to 42,635 shares.
(9) Shared voting and investment power as to 100,196 shares.
11
<PAGE> 14
BENEFICIAL OWNERSHIP OF SECURITIES
The following table contains information known to us with respect to persons
who are the beneficial owner of more than 5% of Common Stock as of December 31,
1999. The shares are directly owned except that the shares in our benefit plans
are held of record, but not beneficially, by the Plan's trustee.
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER AMOUNT PERCENT OF CLASS
------------------- ------ ----------------
<S> <C> <C>
Sanford C. Bernstein & Co., Inc.(1) 14,051,118 12.75%
767 Fifth Avenue
New York, NY 10153
The BFGoodrich Company Retirement 9,238,087 8.38%
Plus Savings Plan and other
Company defined contribution plans(2)
Franklin Mutual Advisers, LLC(3) 6,619,431 6.01%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Morgan Stanley Dean Witter & Co.(4) 6,420,107 5.82%
1585 Broadway
New York, NY 10036
</TABLE>
- ---------------
(1) Has sole voting power as to 7,335,091 shares, shared voting power as to
1,422,556 shares and sole dispositive power as to all 14,051,118 shares.
(2) Participants have voting rights; Trustee is to vote shares for which it does
not receive any voting instructions in the same ratio as shares as to which
it does receive voting instructions.
(3) Has sole voting and dispositive power as to all 6,619,431 shares.
(4) Has shared voting power as to 6,099,247 shares and shared dispositive power
as to all 6,420,107 shares.
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee and the Company are committed to the philosophy
that pay should be linked to Company performance so that the interests of
executives are aligned with the interests of shareholders. This philosophy is
supported by the following guiding principles for the Company's compensation
programs:
- A significant portion of pay will be dependent on the Company's annual and
long-term performance including creation of shareholder value.
- To the degree possible, compensation programs will be designed to use
stock-based incentives in order to link shareholder and executive interests
and to encourage stock ownership by executives.
- A greater percentage of total compensation will be performance-based and
variable (versus fixed compensation) than competitive practices might
suggest.
12
<PAGE> 15
- Total cash compensation is to be above the median and nearing the 75th
percentile of major industrial companies when the variable compensation
elements are earned and be substantially below the median when the variable
compensation elements are not earned. The Company intends to provide total
compensation commensurate with performance -- when there is good
performance, compensation levels will compare favorably with other
companies, and when performance is below expectations, compensation levels
will be below the average of other companies.
The Company's compensation program consists of three elements: annual base
salary, annual cash bonus incentive compensation and long-term incentives. To
assist it in performing its duties, the Committee meets periodically with its
own independent compensation consultant as well as with compensation consultants
retained by the Company.
CHANGES IN EXECUTIVE COMPENSATION IN 2000
In 1999 the Company adopted the Value Management Program, which is a new
measurement for evaluating the Company's financial performance and for
developing and evaluating its business plans. This Program was implemented by
the Company to more effectively measure increases in shareholder value creation.
The primary measurements to be used by the Company are:
- Relative Total Shareholder Return compared to the manufacturing companies
within the S&P 400 index; and
- Total Business Return, which measures earnings before interest, taxes,
depreciation and amortization (EBITDA) as well as cash flow.
Beginning in 2000, the Compensation Committee is changing the performance
measures used for incentive compensation to Relative Total Shareholder Return
and Total Business Return. These measurements have historically been very
accurate estimators for creating shareholder value.
SURVEY DATA
The Compensation Committee establishes compensation programs, in part, on the
basis of competitive factors. It considers both broad-based surveys of large
industrial companies and industry-specific surveys. The principal broad-based
surveys relied upon include preselected, national samples of companies developed
by compensation consultants.
The principal industry-specific surveys utilized are those of selected
aerospace and chemical companies. There is some overlap among the different
survey groups. No separate survey is constructed that includes only those
companies comprising the different indices used in the stock price performance
graph, although some of those companies are contained in the other surveys. The
same surveys are used in determining competitive levels of base salary as well
as various forms of incentive compensation.
The Committee has established the target level for long-term incentive
compensation to be approximately 110% of the survey data median when the Company
achieves its financial goals. The Committee established guidelines for long-term
compensation to achieve this target range a number of years ago, and
periodically reevaluates the guidelines.
13
<PAGE> 16
BASE SALARY
The Company's base salary policy is intended to insure that compensation
practices are competitive within relevant industries and with major industrial
companies. The Compensation Committee believes that the middle of the salary
range for BFGoodrich executives should be at the median base salary of
comparable industrial companies. The Compensation Committee recommends to the
Board of Directors the base salary for the Chief Executive Officer, establishes
the annual base salary for other Company officers at the level of executive vice
president or higher and approves salary midpoint levels and percentage increases
in those levels for other executive positions in the Company. The salary range
for each position is from 25% below the midpoint to 25% above the midpoint.
INCENTIVE COMPENSATION
Incentive compensation is intended to motivate and retain qualified
individuals who have the opportunity to influence Company results significantly
and enhance shareholder value. The philosophy for incentive compensation plans
is to provide awards when financial objectives are achieved and provide reduced
or no awards when the objectives are not achieved. Incentive compensation
programs are divided into two types -- annual cash bonus and long-term incentive
compensation. Generally speaking, the higher an individual's level within the
Company, the greater the percentage of his or her potential total compensation
is represented by incentive compensation.
ANNUAL INCENTIVE COMPENSATION
An individual's annual cash bonus target under the Company's Management
Incentive Plan is expressed as a percentage of his or her salary range midpoint,
with the percentages of salary midpoint increasing with the level of the job. A
total target incentive pool is created for the corporate staff and for each
major business segment. For 1999 the total target incentive pool was further
divided into different financial performance pools for the corporate staff and
for each of the business segments. Incentive payments can range from 50% of the
target amount when the threshold financial objective of the corporate staff and
business segments is achieved, to a maximum of 200% of the target when the
maximum financial objective is achieved. In 1999, the threshold financial
objective for the corporate staff and for the Aerospace and Performance
Materials operating segments ranged from 87% to 97% of target and the maximum
financial objective ranged from 104% to 106% of target. No bonus will be paid if
a minimum financial performance is not achieved.
In 1999 corporate staff financial goals were based solely upon earnings per
share. Aerospace and Performance Materials segment financial goals were based
solely upon segment operating income. In each case, earnings per share and
segment operating income were adjusted to exclude the income and equity effect
of nonrecurring items, extraordinary items, accounting principle changes and
discontinued operations that were not included in the 1999 operating plan,
including, among other things, the income and equity effect of the Coltec
merger. Individual awards are made based upon individual performance within a
range established with reference to achievement of the financial goals. The
Segment Presidents have one-half of their annual incentive bonus related to
their respective segment performance and one-half related to total Company
performance.
As part of its agreement to merge with Coltec Industries Inc, the Company
agreed to continue the annual incentive plans in place within Coltec's aerospace
and engineered industrial products groups for at least the balance of 1999. The
annual performance measures under these plans are stated in terms of growth in
14
<PAGE> 17
profits over the prior year and return on average controllable assets. The plans
establish both minimum and maximum financial objectives stated as varying
percentages of the target.
In 1999, Mr. Burner and two Executive Vice Presidents did not participate in
the Management Incentive Plan. Instead, they participated in the Senior
Executive Management Incentive Plan, which is designed to meet the Federal
income tax deductibility rules of the Internal Revenue Code. As required by the
Code, the plan requires that any award be based upon an objective formula
established at the beginning of the year. For 1999, target annual incentive
awards and financial objectives under the plan were established, based on the
same criteria as the Management Incentive Plan. Incentive payments under the
plan can range from 50% of the target amount when the threshold financial
objective is achieved to a maximum of 150% of the target when the maximum
financial objective is met.
1999 RESULTS
The corporate staff achieved 102%, the Aerospace segment achieved 108% and the
Performance Materials segment achieved 88% of their respective goals in 1999. In
addition, under the continuing Coltec plans the aerospace group achieved 114%
and the engineered industrial products group achieved 88% of their respective
goals.
LONG-TERM INCENTIVE COMPENSATION
Currently, long-term incentive compensation at the Company consists of a
performance-related plan based on a three-year measuring cycle and stock
options.
The Compensation Committee adopted the Long-Term Incentive Plan in 1992, which
is based on the Stock Option Plan. In 1999, the Committee granted Long-Term
Incentive Plan awards to 60 executives.
Currently, the Committee makes awards every year, based on overlapping
three-year performance cycles. At the beginning of each three-year cycle, the
Committee establishes the performance goals, which for the 1999-2001 awards was
Company return on equity. Grants are credited as phantom Performance Shares in a
book account for each participant. Each phantom Performance Share is equivalent
to one share of BFGoodrich common stock. Participants will be entitled to a
payout of shares at the end of each Plan cycle only if the threshold performance
standard is met. The number of shares to be received will range from 50% to 200%
of the total phantom Performance Share account (including shares credited
through dividend equivalents). Awards will be paid in actual BFGoodrich common
shares.
Guidelines establish a target award of Performance Shares with the aggregate
market value of the shares awarded based upon a percentage of salary midpoint
depending upon the individual's position level within the Company -- the higher
the position level the greater the percentage. The determination of whether to
make an award is dependent upon the individual's past performance and
expectations of future performance.
The Stock Option Plan is administered by the Compensation Committee. The Plan
provides that options may not be granted at less than 100% of fair market value
and that options may not be repriced. The Committee has established a target
award for individuals based upon the aggregate exercise price of the options
granted as a percentage of salary midpoint -- the higher the salary midpoint,
the greater the percentage. In 1999, the Committee granted stock options to 232
executives.
15
<PAGE> 18
With respect to the Executive Vice Presidents, the Committee considers the
recommendation of the Chief Executive Officer in determining the level of awards
of long-term incentive compensation. It also considers its own impression of the
individuals since the members have ample opportunity to observe their
performance. With respect to other executives who receive long-term incentive
compensation, the Committee makes the determination of the appropriate awards,
but generally considers the recommendation of management in making the specific
award within the established guidelines. The Committee has available information
as to the level of past awards and individual stock ownership of the executive
officers. The Committee has endorsed a management recommendation establishing
stock ownership guidelines for participants in the Long-Term Incentive Plan at a
multiple of their base salary. The multiple varies from between .75 to 4 times
salary, with the multiple increasing with one's level within the Company.
Individuals are given five years to achieve the target ownership levels. The
factors considered in recommending the awards for the Chief Executive Officer
are discussed below.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Omnibus Budget Reconciliation Act of 1993 established a disallowance of
deductions for tax purposes for certain employee remuneration in excess of $1
million per year beginning in 1994. Under the Internal Revenue Service
regulations, the Company believes all compensation to be earned in 1999 and all
existing awards under the Company's long-term incentive plans should be fully
deductible for Federal income tax purposes.
CHIEF EXECUTIVE OFFICER
Effective January 1, 1999, the Compensation Committee recommended, and the
Board of Directors set, Mr. Burner's base salary at $800,000. In recommending
this base salary, the Committee took into account surveys of base compensation
of chief executive officers of other major industrial companies. The Committee
considered his leadership and key contributions to the overall financial
performance of the Company, and the Company's progress towards achieving
important strategic objectives. Effective September 1, 1999, the Board of
Directors increased Mr. Burner's annual base salary to $850,000 in recognition
of his additional responsibilities following the Coltec acquisition.
In 1999, Mr. Burner's target annual incentive award and financial objectives
under the Senior Executive Management Incentive Plan were established based on
the same criteria as the Management Incentive Plan. For 1999 Mr. Burner received
$1,030,767, or 136% of his target amount under the plan.
In 1999, Mr. Burner received options to purchase 146,900 shares. During 1999,
Mr. Burner was awarded 33,100 Performance Shares under the 1999-2001 Long-Term
Incentive Plan. The guidelines for awards for the Chief Executive Officer and
the actual targets are the same as for other corporate officers. The Committee
used the same factors in recommending these awards as it did in evaluating the
other elements of Mr. Burner's compensation.
The Compensation Committee
George A. Davidson, Jr., Chairman
James J. Glasser, Vice Chairman
Jodie K. Glore
William R. Holland
James R. Wilson
16
<PAGE> 19
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ----------------------
AWARDS PAYOUT
---------- ---------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION OPTIONS/ PAYOUT COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(3) SARS(#) ($)(4) ($)
--------- ---- --------- --------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Burner 1999 816,667 1,030,767 643,771 146,900 320,299 98,923(5)
Chairman, President and 1998 700,000 584,110 30,496 63,900 -0- 81,023
Chief Executive Officer 1997 625,000 650,389 81,926 49,000 1,741,708 66,823
John W. Guffey, Jr.(1) 1999 364,254 752,000 -0- -0- 3,780,000(6) 14,283,444(7)
Executive Vice President and
President, BFGoodrich
Engineered Industrial Products
Marshall O. Larsen 1999 510,000 600,500 81,140 46,500 196,512 61,112(5)
Executive Vice President and 1998 405,000 381,394 34,444 38,700 -0- 42,780
President, BFGoodrich Aerospace 1997 345,000 308,000 46,610 24,000 638,579 40,300
David B. Price, Jr. 1999 400,000 291,961 31,800 42,200 182,586 38,546(5)
Executive Vice President and 1998 370,000 140,807 27,743 35,800 -0- 22,020
President, BFGoodrich 1997 172,500 157,000 21,264 50,000 326,192 949
Performance Materials
Laurence A. Chapman(2) 1999 395,746 297,840 219,636 75,000 40,231 -0-
Senior Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) Prior to July 12, 1999, Mr. Guffey was Chairman and Chief Executive Officer
of Coltec Industries Inc, which became a wholly owned subsidiary of BFGoodrich
on July 12, 1999. Compensation paid prior to July 12, 1999 was paid by Coltec,
as an independent company and is not included in this table. Mr. Guffey retired
as an executive officer of the Company effective December 31, 1999.
(2) Mr. Chapman was named Senior Vice President-Finance on February 15, 1999 and
Senior Vice President and Chief Financial Officer of the Company on March 15,
1999. Prior to that time he was not an executive officer of the Company.
(3) Represents reimbursement for (i) payment of taxes and (ii) personal
benefits, if such benefits total $50,000 or more for a named officer. The 1999
amount for Mr. Burner includes $315,634 for moving and relocation expenses. The
1999 amount for Mr. Larsen includes $17,040 for automobile expenses and $23,505
representing the imputed value in 1999 of the interest-free relocation loan
provided to him by the Company. The 1999 amount for Mr. Chapman includes $78,119
for moving and relocation expenses.
(4) LTIP payouts for 1999 for Messrs. Burner, Larsen, Price and Chapman
represent the fair market value of an interim payout of performance shares under
the 1998 - 2000 Long-Term Incentive Plan, which was made as a result of the
Coltec merger. LTIP payouts for 1997 for Messrs. Burner, Larsen and Price
represent the fair market value of performance shares awarded under the 1995 -
1997 Long-Term Incentive Plan.
(5) With respect to 1999, $9,600 represents our contributions to a tax-qualified
defined contribution plan, and the balance represents our contributions to a
benefit restoration plan with respect to amounts in excess of the amount
permitted to be contributed under the tax-qualified plan.
(6) The LTIP payout for 1999 for Mr. Guffey represents the amount paid to Mr.
Guffey pursuant to the Coltec long-term incentive plans, which became payable
under his Coltec employment agreement upon his retirement from the Company.
(7) The 1999 amount for Mr. Guffey includes $14,230,314 which became payable
under his Coltec employment agreement upon his retirement from the Company,
$4,512 contributed by us to a tax-qualified defined contribution plan, and
$48,618 contributed by us to a benefit restoration plan with respect to amounts
in excess of the amount permitted to be contributed under the tax-qualified
plan.
17
<PAGE> 20
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
------------------------------------------------------- -----------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION 0%
NAME (# OF SHARES) YEAR ($/SH) DATE ($) 5% ($) 10% ($)
---- ------------- ------------ ----------- ---------- --- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. L. Burner 96,900 6.55 36.1563 1/3/09 -0- 2,203,730 5,581,148
50,000 3.38 26.4375 12/31/09 -0- 831,459 2,105,747
J. W. Guffey, Jr. -0- -0- N/A N/A N/A N/A N/A
M. O. Larsen 46,500 3.14 36.1563 1/3/09 -0- 1,057,518 2,678,260
D. B. Price, Jr. 42,200 2.85 36.1563 1/3/09 -0- 959,726 2,430,593
L. A. Chapman 75,000 5.07 33.4063 2/14/09 -0- 1,575,942 3,991,218
All Shareholders N/A N/A N/A N/A -0- 1,906,738,158 4,828,988,690
All Optionees 1,480,100 100 (a) (a) -0- 33,375,737 84,527,105
Optionee Gain as % of all
Shareholder Gain(b) N/A N/A N/A N/A -0- 1.79% 1.79%
</TABLE>
- ---------------
(a) Options were granted under our stock option plan throughout 1999 with
various vesting schedules and expiration dates through the year 2009. The
weighted average exercise price of all options granted to optionees in 1999 was
$35.85.
(b) Based on a closing price of $27.50 per share on December 31, 1999 and a
total of 110,232,008 shares of Common Stock outstanding (excluding 14,000,000
shares held by a wholly owned subsidiary).
The dollar amounts under the potential realizable value column are the result
of calculations of assumed annual compound rates of appreciation over the
ten-year life of the options in accordance with the proxy regulations of the
Securities and Exchange Commission and are not intended to forecast possible
future appreciation, if any, of the Common Stock. The actual value, if any, an
executive may realize will depend on the excess of the market price of the
shares over the exercise price on the date the option is exercised. We did not
use an alternative formula for a grant date valuation, as we are not aware of
any formula that will determine with reasonable accuracy a present value based
on future unknown or volatile factors. The options granted to the named
individuals were immediately exercisable and were granted with limited stock
appreciation rights which generally entitle the optionee to elect to receive the
appreciation on the option in cash for a 60 day period following a "change in
control", which generally is deemed to have occurred if (i) any person becomes
the beneficial owner of 20% or more of the Common Stock or combined voting power
of our outstanding securities (subject to certain exceptions), (ii) during any
two-year period there generally has been a change in the majority of our
Directors, or (iii) certain corporate reorganizations are approved by our
shareholders where the existing shareholders will not retain at least 70% of the
voting securities of the surviving entity.
18
<PAGE> 21
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END OPTIONS/SARS
(# OF SHARES) AT FY-END ($)(a)
------------- ----------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
D. L. Burner 14,800 70,916 379,800/0 472,748/0
J. W. Guffey, Jr. -0- -0- 856,800/0 2,368,510/0
M. O. Larsen 3,400 21,781 197,200/0 183,349/0
D. B. Price, Jr. -0- -0- 128,000/0 0/0
L. A. Chapman -0- -0- 139,900/0 683,749/0
</TABLE>
- ---------------
(a) Based on a closing price per share of $27.50 on December 31, 1999.
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS(2)
SHARES, UNITS PERIOD UNTIL -----------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) PAYOUT # SHARES # SHARES # SHARES
---- ------------- ------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
D. L. Burner 33,100 3 years 16,550 33,100 66,200
J. W. Guffey, Jr.(1) -0- N/A N/A N/A N/A
M. O. Larsen 15,500 3 years 7,750 15,500 31,000
D. B. Price, Jr. 14,100 3 years 7,050 14,100 28,200
L. A. Chapman 9,200 3 years 4,600 9,200 18,400
</TABLE>
- ---------------
(1) Prior to July 12, 1999, Mr. Guffey was Chairman and Chief Executive Officer
of Coltec Industries Inc, which became a wholly owned subsidiary of BFGoodrich
on July 12, 1999. Compensation paid prior to July 12, 1999 was paid by Coltec,
as an independent company and is not included in this table. Mr. Guffey retired
as an executive officer of the Company effective December 31, 1999.
(2) The plan provides that payouts will be based on the Company's return on
equity over the three-year performance period ending December 31, 2001. At the
end of the performance period, each participant will earn actual shares (less
applicable tax withholding) based on the following schedule:
<TABLE>
<CAPTION>
PERCENT PAYOUT OF PHANTOM
TOTAL COMPANY THREE-YEAR PERFORMANCE SHARE
AVERAGE RETURN ON EQUITY ACCOUNT
------------------------ -------------------------
<S> <C> <C>
Below 15% 0%
(Threshold) 15% 50%
(Target) 16% 100%
17% 150%
(Maximum) 18% 200%
</TABLE>
If performance for the three-year period is between the percentage attainment
levels listed above, the performance share award will be prorated accordingly.
19
<PAGE> 22
In connection with the transition of our compensation programs to Value
Management performance measures, our Board of Directors has approved the
termination and early payout of the 1999 Long-Term Incentive Plan awards at the
target level. Each of the persons named in the above table will receive a payout
equal to one-third of the shares shown under the column "Target # Shares". These
awards will be replaced by new 2000 Long-Term Incentive Plan awards using Value
Management performance measures.
RETIREMENT PENSIONS
We have in effect a pension plan for salaried employees which provides
pensions payable at retirement to each eligible employee. The plan makes
available a pension which is paid from funds provided through contributions by
us and contributions by the employee, if any, made prior to 1972. The plan is
not available to Directors other than those who are employees. The amount of an
employee's pension depends on a number of factors including Final Average
Earnings ("FAE") for the highest 48 consecutive months of an employee's earnings
and years of credited service to the Company. The following chart shows the
annual pension amounts currently available to employees who retire with the
combinations of FAE and years of credited service shown in the chart, which
should be read in conjunction with the notes following the chart. The current
plan formula, which became effective as of January 1, 1989, generally provides a
benefit of 1.15% of FAE times all years of pension credit plus 0.45% of FAE in
excess of covered compensation times years of pension credit up to 35 years. In
addition employees hired prior to January 1, 1990, may receive an additional
pension credit of up to 4 years. Benefits become vested after 5 years of
service.
20
<PAGE> 23
1999 PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL YEARS OF BENEFIT SERVICE
AVERAGE -----------------------------------------------------------------
EARNINGS 10 20 25 30 35 40
- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
150,000 $ 22,421 $ 44,841 $ 56,051 $ 67,262 $ 78,472 $ 87,097
200,000 $ 30,421 $ 60,841 $ 76,051 $ 91,262 $106,472 $ 117,972
250,000 $ 38,421 $ 76,841 $ 96,051 $115,262 $134,472 $ 148,847
300,000 $ 46,421 $ 92,841 $116,051 $139,262 $162,472 $ 179,722
350,000 $ 54,421 $108,841 $136,051 $163,262 $190,175 $ 210,597
400,000 $ 62,421 $124,841 $156,051 $187,262 $218,472 $ 241,472
450,000 $ 70,421 $140,841 $176,051 $211,262 $246,472 $ 272,347
500,000 $ 78,421 $156,841 $196,051 $235,262 $274,472 $ 303,222
600,000 $ 94,421 $188,841 $236,051 $283,262 $386,472 $ 426,722
700,000 $110,421 $220,841 $276,051 $331,262 $386,472 $ 426,722
800,000 $126,421 $252,841 $316,051 $379,262 $442,472 $ 488,472
900,000 $142,421 $284,841 $356,051 $427,262 $498,472 $ 550,222
1,000,000 $158,421 $316,841 $396,051 $475,262 $554,472 $ 611,972
1,100,000 $174,421 $348,841 $436,051 $523,262 $610,472 $ 673,722
1,200,000 $190,421 $380,841 $476,051 $571,262 $666,472 $ 735,472
1,300,000 $206,421 $412,841 $516,051 $619,262 $722,472 $ 797,222
1,400,000 $222,421 $444,841 $556,051 $667,262 $778,472 $ 858,972
1,500,000 $238,421 $476,841 $596,051 $715,262 $834,472 $ 920,722
1,600,000 $254,421 $508,841 $636,051 $763,262 $890,472 $ 982,472
1,700,000 $270,421 $540,841 $676,051 $811,262 $946,472 $1,044,222
</TABLE>
- ---------------
(1) Earnings include salary, certain incentive payments including annual cash
bonuses, but excludes awards under long-term incentive programs and the Company
match in the Company savings plans. For the named executive officers, only the
amounts shown in the Summary Compensation Table as Salary and Bonus under Annual
Compensation constitute FAE. As of December 31, 1999, FAE for Messrs. Burner,
Larsen and Price were as follows: D. L. Burner, $1,237,261; M. O. Larsen,
$716,631; and D. B. Price, Jr., $514,366.
(2) In computing the pension amounts shown, it was assumed that an employee
would retire at age 65 and elect to receive a five year certain and continuous
annuity under the pension plan and that the employee would not elect any of the
available "survivor options," which would result in a lower annual pension.
Pensions are not subject to any deduction for Social Security or any other
offset amounts.
(3) As of January 31, 2000, Messrs. Burner, Larsen and Price had the following
credited years of service under the pension plan (including, where appropriate,
up to the 4 additional years): D. L. Burner, 20 years, 9 months; M. O. Larsen,
24 years, 11 months; and D. B. Price Jr., 2 years, 7 months.
(4) Certain executives, including D. L. Burner and D. B. Price Jr., became
vested in benefits immediately and earn an additional benefit equal to 1.6
percent for each of their first 15 years with the Company. As of December 31,
1999, the accrued additional benefits per year were as follows: D. L. Burner,
$296,943; and D. B. Price, Jr., $20,575. These benefits are payable under a
non-qualified supplemental plan funded in part with life insurance policies.
(5) Any benefits shown in the chart which exceed the level of benefits permitted
to be paid from a tax-qualified pension plan under the Internal Revenue Code are
payable under a non-qualified supplemental pension plan, funded in part with
life insurance policies.
(6) J. W. Guffey, Jr. does not participate in the Company's pension plans noted
above.
21
<PAGE> 24
Mr. Guffey retired from the Company effective December 31, 1999 and will
receive pension benefits under Coltec's qualified defined benefit pension plan
and nonqualified supplemental pension plan. Pursuant to those plans, Mr. Guffey
will receive a monthly life annuity of $3,690 payable from the qualified plan
trust and a single lump sum payment of $8.98 million.
Mr. Chapman became a participant in the Company's qualified pension plan on
January 1, 2000, but does not currently participate in the Company's
non-qualified supplemental pension plan referred to in note 5 above. Mr. Chapman
is a participant in the Rohr Supplemental Executive Retirement Plan (the "Rohr
SERP"), which provides for an annual benefit of 2% of final average earnings
times all years of pension credit. The estimated annual benefit payable to Mr.
Chapman under the Rohr SERP upon retirement at age 65 is $292,907, reduced by
the annual retirement benefit received by him under the Company's qualified
defined benefit pension plans. These benefits have been funded in part through
the purchase of an annuity contract.
MANAGEMENT CONTINUITY AGREEMENTS
In 1984 we first entered into management continuity agreements (the
"Agreements") with certain employees, which include all of the executive
officers named in the Summary Compensation Table other than Mr. Guffey.
Presently there are 33 Agreements in effect.
The purpose of the Agreements is to encourage the individuals to carry out
their duties in the event of the possibility of a change in control of the
Company. The Agreements are not ordinary employment agreements and do not
provide any assurance of continued employment unless there is a "change in
control." They generally provide for a two-year period of employment commencing
upon a change in control which generally is deemed to have occurred if (i) any
person becomes the beneficial owner of 20% or more of the Common Stock or
combined voting power of our outstanding securities (subject to certain
exceptions), (ii) during any two-year period there generally has been a change
in the majority of our Directors, or (iii) certain corporate reorganizations
occur where the existing shareholders do not retain at least 70% of the voting
securities of the surviving entity. The Agreements generally provide for the
continuation of employment of the individuals in the same positions and with the
same responsibilities and authorities that they possessed immediately prior to
the change in control and generally with the same benefits and level of
compensation, including average annual increases.
If we or our successor terminate the individual's employment for reasons other
than "cause" or the individual voluntarily terminates his or her employment for
a "good reason" (in each case as defined in the Agreements) the individual would
be entitled to:
- A lump sum cash payment equal to one-twelfth of the individual's annualized
base salary in effect immediately prior to termination, multiplied by the
number of months in such individual's Payment Period. As used in the
Agreement, "Payment Period" means 36 months in the case of Messrs. Burner,
Larsen, Price, Chapman and six other individuals and 24 months in the case
of the other 23 individuals.
- a lump sum cash payment equal to one-twelfth of the greater of the
individual's most recent annual bonus or the individual's "target incentive
amount" under our management incentive program, multiplied by a factor equal
to the number of months in the individual's Payment Period.
- an accelerated payout of outstanding awards under our Long-Term Incentive
Plans.
22
<PAGE> 25
- continuation of all health and welfare benefit plans and programs and all
fringe benefit programs, perquisites and similar arrangements during the
Payment Period.
- a cash payment equal to the sum of the number of stock options in the last
annual grant of stock options by us to the individual, multiplied by the
number of years in the Payment Period, multiplied by the calculated market
value of our Common Stock on the date of the stock option grant, multiplied
by a factor used by us in valuing fully vested stock options with a 10-year
life in our most recent Annual Report on Form 10-K for options held by
senior executives pursuant to the Black-Scholes method of valuing stock
options, or, if such valuation was not made in the Form 10-K, then under the
Black-Scholes method assuming options would be outstanding for 10 years.
- in addition to the benefits to which the individual is entitled under the
retirement plans or programs in which he or she participates, a lump sum
cash payment at retirement in an amount equal to the actuarial equivalent of
the retirement pension to which the individual would have been entitled
under the terms of such retirement plans or programs had the individual
accumulated additional years of continuous service under such plans equal in
length to the Payment Period.
The Agreements provide for a tax gross-up for any excise tax due under the
Internal Revenue Code for these types of agreements.
INDEBTEDNESS
In connection with the relocation of our corporate and aerospace segment
headquarters to Charlotte, North Carolina, we established a real estate loan
program to assist relocating executives. Under this program, an executive may
obtain a no-interest loan from us, the proceeds of which may be used solely for
the construction of a new principal residence. The loan is secured by a first
priority lien on the new residence and is payable in full on demand and in any
event, not later than 30 days after the executive obtains a certificate of
occupancy for the new residence. Three of our executive officers participated in
this loan program in 1999.
The following table sets forth information regarding these loans.
<TABLE>
<CAPTION>
LARGEST AGGREGATE
AMOUNT OUTSTANDING
AT ANY TIME PRINCIPAL BALANCE
NAME DURING 1999 ($) AT JANUARY 31, 2000 ($)
---- ------------------ -----------------------
<S> <C> <C>
M. O. Larsen 521,263 521,263
L. A. Chapman 1,201,000 -0-
T. G. Linnert 170,643 352,910
</TABLE>
23
<PAGE> 26
CUMULATIVE TOTAL SHAREHOLDER PERFORMANCE GRAPHS
Set forth below is a line graph showing the yearly percentage change in the
cumulative total shareholder return for the Common Stock with the similar
returns for the Standard & Poor's 500 Stock Index, the Standard & Poor's
Specialty Chemicals Index and the Standard & Poor's Aerospace/Defense Index.
Each of the returns is calculated assuming the investment of $100 in each of the
securities on December 31, 1994 and reinvestment of dividends into additional
shares of the respective equity securities when paid. The graph plots the
respective values on the five single days which are the last trading days of
calendar years 1994 through 1999. Past performance is not necessarily indicative
of future performance.
TOTAL SHAREHOLDER RETURNS
CUMULATIVE TOTAL SHAREHOLDER GRAPHS
<TABLE>
<CAPTION>
BASE
PERIOD
COMPANY/INDEX DEC94 DEC95 DEC96 DEC97 DEC98 DEC99
------------- ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
The BFGoodrich Company 100 162.99 199.47 209.56 186.38 147.78
S&P 500 Index 100 137.58 169.17 225.60 290.08 351.12
Chemicals (Specialty)-500 100 131.43 134.81 166.93 142.17 157.37
Aerospace/Defense-500 100 165.49 221.36 227.73 174.57 170.07
</TABLE>
24
<PAGE> 27
GOVERNANCE OF THE COMPANY
Pursuant to the New York Business Corporation Law and our by-laws, the
Company's business is managed under the direction of the Board of Directors.
Members of the Board are kept informed of our business through discussions with
the Chairman and officers, by reviewing materials provided to them and by
participating in meetings of the Board and its committees.
Our Board of Directors held 10 meetings in 1999. All Directors, with the
exception of Mr. Margolis, attended more than 75% of the aggregate total number
of meetings held in 1999 by the Board of Directors and the Committees of the
Board of Directors on which they served.
BOARD COMMITTEES
The Board of Directors has an Audit Committee, a Committee on Governance, a
Compensation Committee and a Financial Policy Committee. All members of these
committees are non-employee independent directors. The Board has established
formal written charters for each of these committees.
The Board also has an Executive Committee, consisting of David L. Burner,
Chairman; James J. Glasser; and Alfred M. Rankin, Jr. This committee did not
meet in 1999. The Executive Committee may exercise all of the powers of the
Board of Directors, so far as they may be legally delegated, when the Board is
not in session.
AUDIT COMMITTEE. The members of the Audit Committee as of the date of this
proxy statement are Alfred M. Rankin, Jr., Chairman; Richard de J. Osborne, Vice
Chairman; Diane C. Creel; Jodie K. Glore; William R. Holland; and Douglas E.
Olesen. This committee held three meetings in 1999. The Audit Committee:
- reviews with the independent auditors and the General Auditor the scope of
the audit and the results of the audit examination by the independent
auditors;
- considers and recommends to the Board of Directors the selection of our
independent auditors for the next year;
- reviews with management and the independent auditors the annual financial
statements of the Company;
- reviews the system of internal controls with the independent auditors, the
General Auditor and other financial officers and the General Counsel of the
Company, and maintains open communications with them;
- reviews periodically the quality and adequacy of the Company's financial
organization and personnel;
- reviews material pending legal proceedings with the General Counsel and
keeps abreast of changing areas of law with potential impact on the Company;
- reviews periodically and exercises oversight with respect to the legal and
ethical compliance policies of the Company; and
- exercises oversight and reviews compliance with respect to laws, regulations
and policies concerning environmental, health and safety matters.
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<PAGE> 28
COMMITTEE ON GOVERNANCE. The members of the Committee on Governance as of the
date of this proxy statement are James J. Glasser, Chairman; Alfred M. Rankin,
Jr., Vice Chairman; George A. Davidson, Jr. and A. Thomas Young. This committee
held four meetings in 1999. The Committee on Governance:
- recommends candidates for the Board of Directors of the Company;
- reviews annually the tenure of each Director; and
- considers the size and composition of the Board, the ratio of non-employee
to employee Directors, compensation and retirement of Directors, frequency
and format of Board meetings, Committee structure, service on Committees and
management succession planning.
All candidates for Director of the Company are considered and selected
strictly on the basis of their ability to contribute to the deliberations of the
Board of Directors. Shareholders of the Company wishing to recommend candidates
for the Board may submit the names of such candidates, together with any desired
supporting information, to the Secretary of the Company. This information is
made available to the Committee on Governance to assist it in fulfilling its
duties in this area.
COMPENSATION COMMITTEE. The members of the Compensation Committee as of the
date of this proxy statement are George A. Davidson, Jr., Chairman; James J.
Glasser, Vice Chairman; Jodie K. Glore; William R. Holland; and James R. Wilson.
This committee held six meetings in 1999. The Compensation Committee:
- reviews and recommends to the Board of Directors the adoption or amendment
of the various compensation and benefit plans and programs maintained for
the Officers and other key employees, including any stock option or
incentive compensation plans;
- reviews and approves specific matters which are consistent with such plans
and programs;
- reviews and approves certain compensation and benefit arrangements for
senior management; approves the terms and conditions of awards under the
Stock Option Plan within the limits in the Plan;
- makes awards under the Stock Option Plan and the Long-Term Incentive Plan;
and
- establishes the annual merit salary increase budget for corporate staff
executives; reviews and approves compensation for individuals holding the
offices of Executive Vice President and reviews and recommends to the Board
of Directors for approval the compensation for the Chief Executive Officer.
FINANCIAL POLICY COMMITTEE. The members of the Financial Policy Committee as
of the date of this proxy statement are A. Thomas Young, Chairman; Richard de J.
Osborne, Vice Chairman; Diane C. Creel; David I. Margolis; Douglas E. Oleson;
and James R. Wilson. This committee held four meetings in 1999. The Financial
Policy Committee:
- reviews the policies underlying the Company's financial plan to ensure its
adequacy and soundness in providing for the Company's capital plans;
- reviews and makes recommendations concerning the establishment and
maintenance of a dividend policy;
- reviews, prior to action by the Board, proposed major financing activities
or acquisitions by the Company;
26
<PAGE> 29
- authorizes certain actions with respect to the Company's debt or preferred
stock; and
- authorizes policies and procedures with respect to short-term investments.
COMPENSATION OF DIRECTORS
During 1999 each of our non-employee Directors received fixed compensation for
serving as a Director at the rate of $40,000 per year, plus $1,000 for each
Board and Board Committee meeting attended, except that the chairperson of a
Committee received $1,500 for each meeting of that Committee attended. One half
of the fixed compensation is deferred into a phantom BFGoodrich share account
and is paid out in shares of Common Stock following termination of service as a
Director. Dividends which would be earned on the phantom share account are
credited to the account in additional phantom shares. Directors may elect to
defer a portion or all of the remaining fixed compensation and meeting fees into
the phantom share account. The Board believes that a portion of Director's
compensation should be based on Common Stock similar to executive compensation.
This should more closely align the financial interests of Directors with the
financial interests of shareholders.
In September 1995, the Board of Directors replaced the existing cash
retirement plan for Directors with a new Directors' Phantom Share Plan. Under
the terms of the plan, outside Directors will receive annual grants of phantom
shares equal in value to the current annual retainer for up to ten years.
Dividend equivalents will accrue on all phantom shares credited to a Director's
account. All phantom shares become fully vested at the earlier of five years
from the date of grant, the Director's termination of Board service after age
55, or upon a change in control of the Company as defined in our Stock Option
Plan. Following termination of service as a Director, the cash value of the
vested number of phantom shares will be paid to each Director in twelve monthly
installments. The value of each phantom share is determined on the relevant date
by the fair market value of the Common Stock. The former cash retirement plan
provided upon retirement from the Board of Directors after reaching the age of
55 with at least ten years of service as a Director, any non-employee Director
would be entitled to receive an annual amount equal to the fixed compensation
level in effect at the time of retirement. A retiring Director who has reached
age 55 and has served for at least five but less than ten years would be
entitled to a reduced amount equal to 50% of the fixed compensation level in
effect at retirement, plus 10% of such compensation level for each additional
year of service (rounded to the nearest whole year) up to ten. Transitional
provisions have been provided between the old cash retirement plan and the new
Directors' Phantom Share Plan based on a Director's years of service as of
September 1995. Directors with more than ten years of service will continue to
be eligible under the old plan but will not receive any phantom shares under the
new plan. Outside Directors with at least five but less than ten years service
will continue to be eligible to receive benefits under the old plan with respect
to their accrued benefits through the date of the adoption of the Directors'
Phantom Share Plan and will receive annual grants of phantom shares through
their tenth year. Outside Directors with less than five years of service will
receive no benefits under the old plan, but received initial grants of phantom
shares equal to the current annual cash retainer times the number of completed
years of service and will thereafter receive annual grants of phantom shares up
to an aggregate of ten years. Retired Directors will continue to receive their
retirement benefits.
27
<PAGE> 30
INSURANCE
As authorized by Section 726 of the Business Corporation Law of the State of
New York and our By-Laws, we have purchased insurance providing indemnification
for the Company and its subsidiaries as well as their directors and officers.
The insurance is part of a package which includes employment practices,
fiduciary and crime insurance coverage. The insurance coverage was written by
Federal Insurance Company, Reliance Insurance Company, Royal Insurance Co. of
America, Executive Risk Indemnity, Inc., Continental Casualty Co. and Zurich
Insurance Company, commencing June 19, 1998, for a three-year period, at a total
premium cost of $2,487,947.
CONSULTING ARRANGEMENT WITH MR. RAU
Mr. Rau is currently serving as a consultant to us at a fee of $28,000 per
month, which arrangement will continue through December 31, 2001. Mr. Rau is not
entitled to any additional compensation for serving as a Director. Mr. Rau has
agreed not to engage in any activity which competes with us through December 31,
2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who own more than ten percent of our Common Stock
to file reports of ownership and changes in ownership with the SEC. Based solely
upon a review of such reports and representations from our directors and
executive officers, we believe that during 1999 all such reports were filed on a
timely basis except that, due to a series of administrative oversights, each of
Nicholas J. Calise, George K. Sherwood and Les C. Vinney were late in filing a
Form 5 covering option awards and long-term incentive plan payouts, Jeanette
Graselli Brown was late in filing a Form 5 with respect to phantom shares
received pursuant to directors' deferred compensation plans, each of David L.
Burner, Marshall O. Larsen, Terrence G. Linnert, Robert D. Koney, Jr. and Robert
H. Rau were late in filing a Form 5 covering transactions in our qualified
defined contribution plans, David L. Burner filed an incomplete Form 4 with
respect to a stock option exercise and David B. Price, Jr. was late in filing a
Form 4 to report the purchase of Common Stock. The appropriate reports were
filed by these persons promptly following discovery of the error.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 21, 2000 appointed the firm of Ernst &
Young LLP, subject to ratification by the shareholders at the Annual Meeting, to
audit our accounts with respect to our operations for the year 2000 and to
perform such other services as may be required. Should this firm of auditors be
unable to perform these services for any reason, the Board of Directors will
appoint other independent auditors to perform these services.
Representatives of the firm of Ernst & Young LLP, our auditors for the most
recently completed fiscal year, are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFYING THIS APPOINTMENT.
28
<PAGE> 31
3. APPROVAL OF SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
Shareholders are asked to consider and approve the Senior Executive Management
Incentive Plan (the "Plan") established by the Board of Directors for certain
executive officers.
Under Section 162(m) of the Internal Revenue Code, shareholder approval is
required to enable us to obtain a deduction for awards paid under the Plan to
certain of our executive officers whose compensation for the taxable year is in
excess of $1 million. Shareholder approval of the Plan was obtained in 1995. The
provisions of Section 162(m) require that the Plan be reapproved by shareholders
no less often than every five years in order for us to continue excluding the
amounts paid from the $1 million deductibility limit. Therefore, shareholders
are being requested to again approve the Plan.
The Plan has been changed, subject to shareholder approval, to make it
consistent with recent changes to our Management Incentive Program, which is our
regular annual cash bonus plan for executives. These changes include:
- An increase in the maximum award level from 150% to 200% of the executive's
target incentive amount.
- An increase in the maximum award payable to a participant in any plan year
from $1.5 million to $2.5 million.
- Addition of performance measures that may be used under the Plan, including
Relative Total Shareholder Return and Total Business Return.
- A modification in the Plan's change of control definition so that a change
of control occurs only upon the consummation of (rather than shareholder
approval of) a merger or other corporate reorganization.
A summary of the Plan appears below. This summary is qualified in its entirety
by reference to the text of the Plan, which is included as Appendix B to this
proxy statement.
ELIGIBILITY
Participation will be limited to those senior executives whose compensation
may become subject to the non-deductibility provisions of the Internal Revenue
Code described above. The only individuals who are subject to the
non-deductibility provisions are those executive officers required to be named
in the Summary Compensation Table of our proxy statement. Generally, this
includes the Chief Executive Officer as well as the four other most highly
compensated executive officers. The Compensation Committee will determine who
will be a participant prior to or within 90 days of the beginning of each year.
AWARDS
Each year the Compensation Committee will establish a target level of
incentive opportunity, stated as a percentage of the salary midpoint of each
participant. In addition, a threshold and maximum award level will be
established. Threshold award level represents the level above which an incentive
award would be paid to a participant. Performance at or below the threshold
level will earn no incentive payments. The maximum award level represents the
maximum amount of incentive award that may be paid to a participant for a plan
year, even if the maximum performance threshold is equaled or exceeded. Each
participant's maximum
29
<PAGE> 32
award level will be 200% of his or her target incentive amount. Under no
circumstances will any participant be paid an award exceeding $2,500,000.
PERFORMANCE MEASURES
The Compensation Committee will establish performance goals based upon one or
more of the following performance measures: net income, pre-tax income,
consolidated operating income, segment operating income, return on equity,
operating income return on net capital employed, return on assets, cash flow,
working capital, share appreciation, total shareholder return relative to the
manufacturing companies within the S&P 400 index, total business return
(calculated utilizing earnings before interest, taxes, depreciation and
amortization (EBITDA) and cash flow) and earnings per share of common stock.
PERFORMANCE GOALS
The Compensation Committee will designate each year the incentive category and
percentage of salary midpoint for each participant to determine his or her
incentive target amount; the performance measures and calculation methods to be
used for that year; a schedule of each performance measure for establishing the
threshold performance level; target performance level; and the maximum
performance level and the method of measuring performance as a percentage of a
participant's target incentive amounts; and the relative weightings of the
performance measures if more than one is designated.
PARTIAL PAYMENT
In the event of death, disability or early or normal retirement, incentive
awards will be paid pro rata based on the portion of the plan year the
participant was employed. A pro rata interim payment shall be required in the
event of a "change in control" as defined under "Management Continuity
Agreements".
PLAN ADMINISTRATION
The Plan will be administered by the Compensation Committee. The Committee is
empowered to set pre-established performance targets, measure the results and
determine the amounts payable according to the formula. The Committee must
certify that the performance goals and any other material terms were exceeded
prior to the payment of any bonus. While the Committee may not increase the
amounts payable under the formula, it retains discretionary authority to reduce
the amount of compensation that would otherwise be payable to participants if
the goals are attained.
PERIODIC REAPPROVAL BY SHAREHOLDERS
Under Internal Revenue Service regulations, because the Compensation Committee
has authority to vary the performance measures used, the shareholders will have
to reapprove the Plan every five years in order for payments to continue to be
excluded from the non-deductibility limitations of the Internal Revenue Code.
NEW PLAN BENEFITS
Messrs. Burner, Larsen and Price were the only executive officers designated
by the Compensation Committee to participate in the Plan in 1999. The Committee
has designated all seven of its executive officers (including Messrs. Burner,
Larsen, Price and Chapman) to participate in the Plan in 2000. These individuals
will not participate in the annual cash bonus plan available to other
executives.
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<PAGE> 33
The Compensation Committee has established performance goals for 2000 based
upon the following performance measures:
- Relative Total Shareholder Return ("RTSR") - RTSR measures the return that
we provide our shareholders over time as compared to the manufacturing
companies within the S&P 400 index. This return consists of increases in our
stock price - capital gains - and free cash flows returned to investors in
the form of dividends.
- Total Business Return ("TBR") - TBR allows individual business units to
measure their contribution to BFGoodrich in the same way that our
shareholders use total shareholder return ("TSR") to measure the performance
of the entire company. As with the TSR measure, TBR measures the capital
gains (or the change in earnings before interest, taxes, depreciation and
amortization, or EBITDA) and dividends (or free cash flows) generated by a
unit over a specific period relative to the unit's initial entity value.
The following table shows the range of bonuses payable under the Plan during
2000 to each of the identified individuals and groups:
<TABLE>
<CAPTION>
DOLLAR VALUE ($)
NAME AND POSITION MINIMUM-MAXIMUM
----------------- ----------------
<S> <C>
D. L. Burner................................................ 0 - 1,572,500
Chairman, President and Chief Executive Officer
J. W. Guffey, Jr............................................ -0-
Executive Vice President and President, BFGoodrich
Engineered Industrial Products
M. O. Larsen................................................ 0 - 798,000
Executive Vice President and President, BFGoodrich
Aerospace
D. B. Price, Jr............................................. 0 - 630,000
Executive Vice President and President, BFGoodrich
Performance Materials
L. A. Chapman............................................... 0 - 451,200
Senior Vice President and Chief Financial Officer
Executive Officer Group..................................... 0 - 4,872,500
Non-Executive Director Group................................ -0-
Non-Executive Officer Employee Group........................ -0-
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE SENIOR
EXECUTIVE MANAGEMENT INCENTIVE PLAN.
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<PAGE> 34
OTHER MATTERS
The Board knows of no other matters that may properly be presented to the
meeting, but if other matters do properly come before the meeting, it is
intended that the persons named in the proxy will vote according to their best
judgment.
Under our By-Laws, any shareholder entitled to vote at the Annual Meeting may
bring business before the meeting if such shareholder provides written notice
to, and such notice is received by, the Secretary of the Company generally not
less than 90 nor more than 120 days prior to the first anniversary of the
preceding year's annual meeting. For the 2000 Annual Meeting such notice must
have been received between December 20, 1999 and January 19, 2000. Each such
notice must include:
- for each matter, a brief description thereof and the reasons for conducting
such business at the annual meeting;
- the name and address of the shareholder proposing such business as well as
any other shareholders believed to be supporting such proposal;
- the number of shares of each class of Company stock owned by such
shareholders; and
- any material interest of such shareholders in such proposal.
See Appendix A for the full text of the relevant section of the By-Laws.
We have not been notified of any additional business to be presented at the
meeting. This notice requirement applies to matters being brought before the
meeting for a vote. Shareholders, of course, may and are encouraged to ask
appropriate questions at the meeting without having to comply with the notice
provisions.
SHAREHOLDER PROPOSALS
Under the rules of the SEC, if a shareholder wants us to include a proposal in
our proxy statement for presentation at the 2001 Annual Meeting, the proposal
must be received by us, attention: Office of the Secretary, at our principal
executive offices by November 3, 2000. We suggest that such proposals be sent by
certified mail, return receipt requested.
Dated March 3, 2000 By Order of the Board of Directors
Kenneth L. Wagner
Assistant Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
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<PAGE> 35
APPENDIX A
BY-LAWS
ARTICLE I, SECTION 10
SECTION 10. (A) ANNUAL MEETINGS OF SHAREHOLDERS. (1) Nominations of persons
for election to the Board of Directors of the Company and the proposal of
business to be considered by the shareholders may be made at an annual meeting
of shareholders (a) pursuant to the Company's notice of meeting, (b) by or at
the direction of the Board of Directors or (c) by any shareholder of the Company
who was a shareholder of record at the time of giving of notice provided for in
this By-Law, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this By-Law.
(2) For nominations or other business to be properly brought before an annual
meeting by a shareholder pursuant to clause (c) of paragraph (A) (1) of this
By-Law, the shareholder must have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the Company not
less than 90 days nor more than 120 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the shareholder to be timely
must be so delivered not earlier than the 120th day prior to such annual meeting
and not later than the close of business on the later of the 90th day prior to
such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Such shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, the name, age, principal
occupations and employment during the past five years, name and principal
business of any corporation or other organization in which such occupations and
employment were carried on, a brief description of any arrangement or
understanding between such person and any other person(s) (naming such
person(s)) pursuant to which he was or is to be selected as a nominee, and the
written consent of such person(s) to serve as a director if elected; (b) as to
any other business that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; (c) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such shareholder, as they appear on the Company's books,
of such beneficial owner and any other shareholders believed by such shareholder
to be supporting such nominee(s) or other business and (ii) the class and number
of shares of the Company which are owned beneficially and of record by such
shareholder, such beneficial owner and any other shareholders believed by such
shareholder to be supporting such nominee(s) or other business.
(3) Notwithstanding anything in the second sentence of paragraph (A) (2) of
this By-Law to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Company is increased and there is no
public announcement naming all of the nominees for Director or specifying the
size of the increased Board of Directors made by the Company at least 70 days
prior to the first anniversary of the preceding year's annual meeting, a
shareholder's notice required by this By-Law shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Company not later
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<PAGE> 36
than the close of business on the 10th day following the day on which such
public announcement is first made by the Company.
(B) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be conducted at
a special meeting of shareholders as shall have been brought before the meeting
pursuant to the Company's notice of meeting. Nominations of persons for election
to the Board of Directors may be made at a special meeting of shareholders at
which directors are to be elected pursuant to the Company's notice of meeting
(a) by or at the direction of the Board of Directors or (b) provided that the
Board of Directors has determined that directors shall be elected at such
special meeting, by any shareholder of the Company who is a shareholder of
record at the time of giving of notice provided for in this By-Law, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-Law. In the event the Company calls a special meeting of
shareholders for the purpose of electing one or more directors, any such
shareholder may nominate a person or persons (as the case may be), for election
to such position(s) as specified in the Company's notice of meeting, if the
shareholder's notice required by paragraph (A) (2) of this By-Law shall be
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 120th day prior to such special meeting and not later than the
close of business on the later of the 90th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
(C) GENERAL. (1) Only such persons who are nominated in accordance with the
procedures set forth in this By-Law shall be eligible to serve as directors and
only such business shall be conducted at a meeting of shareholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this By-Law. The Chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this By-Law and,
if any proposed nomination or business is not in compliance with this By-Law, to
declare that such defective proposal shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the Company
with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(3) Notwithstanding the foregoing provisions of this By-Law, a shareholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
By-Law. Nothing in this By-Law shall be deemed to affect any rights of
shareholders to request inclusion of proposals in the Company's proxy statement
pursuant to Rule 14a-8 under the Exchange Act.
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<PAGE> 37
APPENDIX B
PROPOSED SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
THE B.F.GOODRICH COMPANY
SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
PURPOSE
The B.F.Goodrich Company Senior Executive Management Incentive Plan (the
"Plan") has been established to provide opportunities to certain senior
executives to receive incentive compensation as a reward for high levels of
personal performance above the ordinary performance standards compensated by
base salary, and for their contributions to strong performance of the Company.
The Plan, together with base compensation, is designed to provide above average
total cash compensation when all relevant performance objectives are achieved
and below average total cash compensation when such objectives are not achieved.
ELIGIBILITY
Participation in the Plan will be limited to those senior executives whose
compensation may become subject to the non-deductibility provisions of Section
162(m) of the Internal Revenue Code of 1986, as amended, or any similar
successor provision (the "Code"). Participants will be selected prior to or
within 90 days of the beginning of each Plan Year by the Compensation Committee
of the Company's Board of Directors or a subcommittee of the Compensation
Committee consisting only of those members of that Committee who are "outside"
Directors as defined in regulations under the Code if any members of the
Compensation Committee are not "outside" Directors as so defined (the
"Committee").
INCENTIVE CATEGORIES
Each year the Committee will assign each Participant to an incentive category
based on organizational level and potential impact on important Company or
business unit results. The incentive categories define the target level of
incentive opportunity, stated as a percentage of salary midpoint as determined
by the Committee, that will be available to the Participant if the Company's
target performance levels are met for the Plan Year (the "Target Incentive
Amount").
MAXIMUM AND THRESHOLD AWARDS
Each Participant will be assigned maximum and threshold award levels. Maximum
award level represents the maximum amount of incentive award that may be paid to
a Participant for a Plan Year. Threshold award level represents the level above
which an incentive award will be paid to a Participant. Performance at or below
threshold level will earn no incentive payments. Each Participant's maximum
award level will be 200% of his or her Target Incentive Amount. Under no
circumstances will any Participant be paid an award exceeding $2,500,000.
35
<PAGE> 38
PERFORMANCE MEASURES
Performance measures that may be used under the Plan include Net Income,
Pretax Income, Consolidated Operating Income, Segment Operating Income, Return
on Equity, Operating Income Return on Net Capital Employed, Return on Assets,
Cash Flow, Working Capital, Share Appreciation, Total Shareholder Return
relative to the manufacturing companies within the S&P 400 index, Total Business
Return (calculated utilizing Earnings Before Interest, Taxes, Depreciation and
Amortization and cash flow) and Earnings per Share of Common Stock of the
Company for the Plan Year.
PARTIAL PLAN YEAR PARTICIPATION
Subject to the Change in Control provisions described below, incentive awards
to Participants who terminate during the plan year for reasons of death,
disability, or normal or early retirement will be calculated as specified above
and will be paid pro rata based on a fraction, the numerator of which is the
number of full and partial months of the Plan Year during which the Participant
was employed by the Company, and the denominator of which is the total number of
months in the Plan Year. Subject to the Change in Control provisions described
below, Participants who terminate during a Plan Year for reasons other than
death, disability, or normal or early retirement will receive no incentive award
payments for such Plan Year.
PERFORMANCE GOALS
The Committee will designate, prior to or within 90 days of the beginning of
each Plan Year:
- The incentive category and percentage of salary midpoint for each
Participant to determine his or her Target Incentive Amount;
- The performance measures and calculation methods to be used for the Plan
Year;
- A schedule for each performance measure relating achievement levels for the
performance measure to incentive award levels as a percentage of
Participants' Target Incentive Amounts; and
- The relative weightings of the performance measures for the Plan Year.
PERFORMANCE CERTIFICATION
As soon as practicable following the end of each Plan Year, the Committee will
certify the Company's performance with respect to each performance measure used
in that Plan Year.
AWARD CALCULATION AND PAYMENT
Individual incentive awards will be calculated and paid as soon as practicable
following the Committee's certification of performance for each Plan Year. The
amount of a Participant's incentive award to be paid based on each individual
performance measure will be calculated based on the following formula (the
"Formula").
36
<PAGE> 39
<TABLE>
<S> <C> <C> <C> <C>
Participant's x Participant's Incentive x Percentage of
salary range Category percentage Target
midpoint Award to be paid
for
achievement against
Performance Measure
</TABLE>
<TABLE>
<S> <C> <C> <C>
x Relative weighting = Amount of Incentive
of award based on
Performance Measure Performance Measure
</TABLE>
The incentive amounts to be paid to the Participant based on each performance
measure will be summed to arrive at the Participant's total incentive award
payment for the Plan Year.
PAYMENT UPON CHANGE IN CONTROL
Anything to the contrary notwithstanding, within five days following the
occurrence of a Change in Control, the Company shall pay to each participant an
interim lump-sum cash payment (the "Interim Payment") with respect to his or her
participation in the Plan. The amount of the Interim Payment shall equal the
product of (x) the number of months, including fractional months, that have
elapsed until the occurrence of the Change in Control in the calendar year in
which the Change of Control occurs and (y) one-twelfth of the greater of (i) the
amount most recently paid to each participant for a full calendar year under the
Plan or the Company's Management Incentive Program, or (ii) the Target Incentive
Amount for each participant in effect prior to the Change in Control for the
calendar year in which the Change in Control occurs, under the Plan. The Interim
Payment shall not reduce the obligation of the Company to make a final payment
under the terms of the Plan, but any Interim Payment made shall be offset
against any later payment required under the terms of the Plan for the calendar
year in which a Change in Control occurs. Notwithstanding the foregoing, in no
event shall any participant be required to refund to the Company, or have offset
against any other payment due any participant from or on behalf of the Company,
all or any portion of the Interim Payment.
For purposes of the Plan, a Change in Control shall mean
(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended(the "Exchange Act")), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise of a conversion
privilege), (B) any acquisition by the Company or any of its subsidiaries, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D) any acquisition by
any corporation with respect to which, following such acquisition, more than 70%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to
37
<PAGE> 40
such acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be; or
(ii) During any period of two consecutive years, individuals who, as of the
beginning of such period, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the beginning of such
period whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(iii) Consummation of a reorganization, merger or consolidation, in each case,
with respect to which all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation, do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than 70%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger or consolidation of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be; or
(iv) Consummation of (A) a complete liquidation or dissolution of the Company
or (B) a sale or other disposition of all or substantially all of the assets of
the Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 70% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be.
PLAN YEAR
The Plan Year shall be the fiscal year of the Company.
PLAN ADMINISTRATION
The Plan will be administered by the Committee. The Committee is empowered to
set preestablished performance targets, measure the results and determine the
amounts payable according to the Formula. While the Committee may not increase
the amounts payable under the Formula, it retains discretionary authority to
reduce the amount of compensation that would otherwise be payable to the
Participants if the goals are attained. The Committee is empowered to modify the
terms of the Plan from time to time to ensure that it complies with the
requirements of Code and any regulations issued thereunder.
38
<PAGE> 41
[BF GOODRICH LOGO]
<PAGE> 42
[LOGO]
March 3, 2000
To our Shareholders:
The Annual Meeting of Shareholders will be held on the third floor of the
Charlotte Marriott City Center, 100 West Trade Street, Charlotte, North Carolina
on Monday, April 17, 2000, at 10:30 A.M.
The proxy statement contains information regarding the meeting, the nominees for
election to the Board of Directors, the proposal to ratify the appointment of
Ernst & Young LLP as independent auditors and the proposal to approve the
Company's Senior Executive Management Incentive Plan. The voting results from
the Annual Meeting of Shareholders will be posted on our web site,
www.bfgoodrich.com on April 18.
It is important that your shares be represented at this meeting. Even if you
plan to attend, we encourage you to promptly sign, date and return your proxy in
the enclosed postage-paid envelope.
Sincerely,
/s/ David L. Burner
David L. Burner
Chairman and
Chief Executive Officer
THE B.F.GOODRICH COMPANY
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes David L. Burner and Kenneth L.
Wagner, either of them, with full power of substitution, to represent the
undersigned and to vote all Common Stock of THE B.F.GOODRICH COMPANY which
the undersigned would be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on April 17, 2000, and at any
adjournment thereof, as indicated and in their discretion upon other
matters as may properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
This card also constitutes your voting instructions for any and all
shares held of record by The Bank of New York for your account in the
Company's Dividend Reinvestment Plan and will be considered to be voting
instructions to the Plan Trustee with respect to shares held in accounts
under The B.F.Goodrich Retirement Plus Savings Plan and similar plans of
subsidiaries.
Please sign on the reverse side of this card and return it promptly in
the enclosed return envelope to The Bank of New York, Proxy Department, New
York, NY 10203-0029.
THE B.F.GOODRICH COMPANY
P.O. BOX 11054
NEW YORK, NY 10203-0054
<PAGE> 43
Two New Ways to Vote Your Proxy [LOGO]
VOTE BY TELEPHONE OR INTERNET
24 Hours a Day - 7 Days a Week
It's Fast and Convenient
<TABLE>
<CAPTION>
TELEPHONE INTERNET MAIL
--------- -------- ----
800-650-4226 http://proxy.shareholder.com/gr
<S> <C> <C>
- - Use any touch-tone telephone. - Go to the website address listed above. - Mark, sign and date your proxy card.
- - Have your Proxy Form in hand. OR - Have your Proxy Form in hand. OR - Detach card from Proxy Form.
- - Enter the Control Number - Enter the Control Number - Return the card in the postage-
located in the box below. located in the box below. paid envelope provided.
- - Follow the simple recorded - Follow the simple instructions.
instructions.
Your telephone or internet vote authorizes the named proxies
to vote your shares in the same manner as if you marked,
signed and returned the proxy card. If you have submitted
your proxy by telephone or the internet there is no need for
you to mail back your proxy.
800-650-4226
CALL TOLL-FREE TO VOTE
-----------------------------
CONTROL NUMBER
FOR TELEPHONE/INTERNET VOTING
-----------------------------
</TABLE>
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY THE TELEPHONE OR INTERNET
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS*(as marked [ ] To include any
listed below for all nominees listed below to the contrary below) comments or
changes of
David L. Burner, Diane C. Creel, George A. Davidson, Jr., James J. Glasser, Jodie K. Glore, William address, mark
R. Holland, Douglas E. Olesen, Richard de J. Osborne, Alfred M. Rankin, Jr., James R. Wilson this box and use
and A. Thomas Young. the reverse side.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE "EXCEPTIONS" BOX [ ]
AND WRITE THAT NOMINEE'S NAME ON
THE SPACE PROVIDED BELOW. If you agree to
access our
*EXCEPTIONS Annual Report
---------------------------------------------------------------------------------------------- and Proxy
Statement
2. Approval of Ernst & Young LLP as auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ] electronically
in the future,
3. Approval of the Company's Senior Executive FOR [ ] AGAINST [ ] ABSTAIN [ ] please mark
Management Incentive Plan. this box. [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. If you do not
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS want to receive
AND FOR PROPOSALS 2 AND 3. an Annual
Report for this
account, please
Please sign exactly as name appears mark this
hereon. Joint owners should box. [ ]
each sign. When signing as an
attorney, executor, administrator,
trustee or guardian, please give full
title as such.
Dated:___________________________________, 2000
_______________________________________________
Signature
_______________________________________________
Signature
VOTES MUST BE INDICATED
Sign, Date and Return this Voting Instruction Card Promptly Using the Enclosed Envelope. (X) IN BLACK OR BLUE INK.
</TABLE>
